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Latest Update to the EU’s Blacklist of Non-Cooperative Tax Jurisdictions

The EU’s Blacklist of Non-Cooperative Tax Jurisdictions

The EU has released an updated version of its (now infamous) list of non-cooperative tax jurisdictions, making only three small changes to its previous iteration.

Anguilla and Barbados were added to the list, while the Cayman Islands and Oman were removed after completing a series of tax, transparency and good governance reforms required by the European Union.

Anguilla and Barbados made the latest version as a result of a failure to fully comply with transparency and exchange of information requirements. As reported by the Global Forum on Transparency and Exchange of Information for Tax Purposes, Anguilla was deemed “non-compliant,” while Barbados was labelled as “partially compliant.” 

On the other hand, Cayman Islands was taken off the list following reforms to its framework on Collective Investment Funds.

Similarly, Oman was removed “after it ratified the OECD Convention on Mutual Administrative Assistance in Tax Matters, enacted legislation to enable automatic exchange of information and took all the necessary steps to activate its exchange-of-information relationships with all the EU member states.”

Opposing Views on the Cayman Island’s Change of Status in the EU’s Blacklist

Opposing Views on the Cayman Island’s Change of Status in the EU’s Blacklist

Government officials and industry were glad to receive news of the Cayman Island’s exclusion.

Cayman’s Premier Alden McLaughlin reiterated his jurisdiction’s commitment to transparency and solid governance in tax affairs, adding that his administration “will continue collaborating with the EU, including through broadening our dialogue to topics of mutual interest.”

Furthermore, the Alternative Investment Management Association (AIMA), an international organization dedicated to hedge funds, welcomed the decision.

AIMA’s CEO Jack Inglis said, “The Cayman Islands have been at the forefront of tax transparency in the asset management industry and the EU’s decision is a recognition of the jurisdiction meeting the most stringent conditions.”

“This is good news for the alternatives industry, given the importance of the Cayman Islands as a fund and services centre globally,” he concluded.

AIMA Cayman’s Chairman Ronan Guilfoyle also said, “This action by the EU acknowledges that the regimes established by the Cayman Islands for fund regulation and the wider economic substance requirement, as well as those for the exchange of tax and financial information, anti-money laundering and related measures are fully in line with international standards.”

Finally, Cayman Finance’s CEO Jude Scott, who leads the island’s umbrella organization dedicated to the financial service provider industry, shared overall this sentiment.

Scott said, “The EU’s recognition of the Cayman Islands as cooperative on both transparency and fair taxation is an important validation of Cayman’s commitment to a responsible policy of tax neutrality that poses no harm to other countries.”

On the other side of the coin, tax justice proponents were up in arms following the removal of the Cayman Islands from the EU’s list of non-cooperative tax jurisdictions.

Chiara Putaturo, who serves as Oxfam’s EU Tax Policy Advisor, said, “While we welcome the addition of Barbados, removing the Cayman Islands, one of the world’s most notorious tax havens, from the EU tax haven blacklist is further proof that the process isn’t working.”

Putaturo added: “If the blacklist is to retain any credibility the EU must include all countries that operate as tax havens - including countries with zero corporate tax rates and countries where corporate investments outstrip the level of real economic activity they engage in. It is essential that the European Commission and the Council fill these gaps – this should be top of the agenda when it reviews the definition of harmful tax regimes next year.”

Additionally, Alex Cobham, Head of the Tax Justice Network, expressed his views on this status change on Twitter, writing that it’s “hard to know whether it's testament to the lobbying efforts of the world's worst financial secrecy jurisdiction, Cayman, or the sheer methodological ineptitude of the EU blacklist.”

Following these changes, the EU’s blacklist is composed of twelve jurisdictions: American Samoa, Anguilla, Barbados, Fiji, Guam, Palau, Panama, Samoa, Seychelles, Trinidad and Tobago, the US Virgin Islands and Vanuatu.

According to an EU press release, this blacklist names the “non-EU jurisdictions that either have not engaged in a constructive dialogue with the EU on tax governance or have failed to deliver on their commitments to implement reforms to comply with a set of objective tax good governance criteria, concerning tax transparency, fair taxation and implementation of international standards against tax base erosion and profit shifting.”